MENU

Why Catapult Group International Ltd is one stock to watch

You may have noticed AFL, rugby union and rugby league players wearing what look like bras, with a special pocket in the middle of their back.

No, it’s not a new fashion statement, but a recent trend in sports analytics, with players wearing hardware devices to monitor and track their performance on the field.

Catapult Group International Ltd (ASX: CAT) is the company providing those devices as well as the sophisticated analytical software, which can be used to analyse the data gathered by the device.

A recent listing on the ASX, Catapult has a huge range of clients, including all AFL teams, all NRL teams every Super Rugby team, Australia’s cricketers, Wallabies and Socceroos, not to mention the Australian Institute of Sport – and that’s just in Australia.

Overseas, Catapult products are used by 12 US National Football League (NFL) teams, 10 US National Basketball Association (NBA) teams, 10 British soccer teams and more than 30 other premier teams competing in European competitions. In fact, 70% of revenues come from offshore. The funds raised in the IPO will be used to continue the company’s expansion into North America and Europe in particular.

Two of the company’s founders still work full time in the business, and hold a significant amount of shares after the IPO. Growth is expected to come from increased market penetration, continued subscription sales, recurring revenue, product upgrades and new analytical packages, and expansion into new markets such as military/defence and consumer devices.

Could this company, with its technology purchased from the Commonwealth Co-operative Research Centre (CRC) and its numerous patents be another CSL Limited (ASX: CSL)? By the way, did you know that CSL started out as Commonwealth Serum Laboratories, before being privatised in 1994 – hence the CSL.

Potentially it could be yes. But at this stage it’s still a risky proposition and the company has yet to produce a profit. It’s unlikely to pay a dividend either in its early days – with the company noting in its prospectus that it believes cash would be better served by being reinvested back into the company. If the company can generate high returns on equity – then logically, it should reinvest the cash back into the business.

Add this one to your watchlist.

DID YOU KNOW... The Motley Fool's top analysts have just completed a brand-new free report on their top pick for 2015. Be among the first to get the name and code right now. (Hint: It's another sexy ASX tech company!) Simply click here for your FREE copy... BEFORE the investing crowd gets wind of this!

Motley Fool writer/analyst Mike King owns shares in CSL Limited. You can follow Mike on Twitter @TMFKinga

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.